Auto Outlook: Automakers rewarded as buyers opt for gas-sippers

High gasoline prices may be helping the auto industry to its best year in recent memory with sales on pace to top 15 million vehicles on an annual basis.

With unleaded regular near or exceeding $4 a gallon in most of the country, some U.S. auto executives have already proclaimed 2012 the year of the car as consumers scrap or trade-in aging, repair-prone vehicles for new more fuel-efficient passenger cars and smaller SUVs.

"Higher gas prices are spurring people to buy vehicles because they want vehicles that get better fuel economy," Ford Motor Co. Americas President Mark Fields told The Detroit News ahead of the New York International Auto Show.

Fields said Ford is adding shifts at assembly plants in Chicago and Michigan to keep up with anticipated demand for new vehicles like the 2013 Lincoln MKZ, which debuted in New York.

"We had always expected the industry to come back," he said, "and we're adding a number of shifts."

Ford sold 223,418 vehicles last month, a 5 percent improvement, for its best U.S. March sales since 2007. The story was better for General Motors and Chrysler, which saw March sales rise 12 percent and 34 percent, respectively.

GM said a dozen of its vehicles EPA-rated to get at least 30 mpg on the highway had combined sales of more than 100,000 units in March.

"Three years ago, about 16 percent of the vehicles GM sold achieved at least 30 mpg on the highway. Today, that number is about 40 percent and we have more new fuel-economy leaders on the way, including the Chevrolet Spark, Cadillac ATS and Buick Encore," said GM North America President Mark Reuss in a statement.

In 2011, GM said 40 percent of its new vehicles had four-cylinder engines and it plans to double the number of vehicles offering turbocharged engines from four to eight in the 2013 model year.

"Automakers who invest in more efficient vehicles are investing wisely," said a Carol Lee Rawn, transportation director of sustainability advocate Ceres, which released a report by Citi Investment Research and Analysis.

"Given the volatility of gas prices -- and the likelihood that they'll head through the roof again -- it's clear that customers want better fuel economy and delivering it means a better bottom line for the industry," she said.

The report, "Fuel Economy Focus: Perspectives on 2020 Industry Implications," found profits of U.S. automakers are likely to grow more than 6 percent thanks to new proposed national gas mileage and emissions standards that gradually raise Corporate Average Fuel Economy to 54.5 mpg between 2017 and 2025. The report estimates that could translate to an extra $2.4 billion profit for American automakers in 2020 with industrywide profits rising 5.3 percent or $4.76 billion.

The increase in mileage standards could boost sales of GM, Ford and Chrysler by 4 percent, or 300,000 vehicles, the report concluded.

"Although the automotive industry as a whole will benefit by meeting the new standards, the Detroit Three will enjoy the highest relative profits boost," Oakland University School of Business professor Walter McManus, who did the report's sales and profits analysis, said in a release.

"Automakers today are already working on the improvements to the internal combustion engine and overall vehicle design to get us to 54.5 mpg," said Alan Baum, whose firm conducted the sector analysis. "Turbocharged direct injection, advanced transmissions, electric power steering, low-rolling resistance tires, turbocharging, variable valve lift and timing are available now and they continue to improve.

"These technologies are not only cost-effective, but also make for better performing vehicles than those currently on the market."

Most popular Hyundai models in short supply

South Korean automaker Hyundai is worried about running short of its two best-selling cars, the fuel-efficient Elantra and Sonata sedans.

Hyundai sales jumped 13 percent in March as buyers gobbled up the cars, cutting inventories of the compact Elantra to just one day and 25 days for the Sonata, the Los Angeles Times said.

John Krafcik, chief executive officer of Hyundai Motor America, said the company's assembly plant in Montgomery, Ala., was running at full capacity, adding that the supply of U.S.-made Elantras is "pretty much tapped out." He said he hopes imports of vehicles manufactured overseas will help meet U.S. demand.

With fuel prices rising steadily in March, Hyundai had the industry's best average fleet fuel economy of any car company at 28.2 mpg.

Toyota's March sales were up 15 percent and Japan's Nissan saw a 13 percent monthly sales gain, helped by soaring demand for its mid-sized Altima sedan. A redesigned 2013 Altima hits showrooms later this year.

Bucking the trend, slowing sales of the one-time segment leading Honda Civic and Accord sent American Honda Motor Co.'s March sales down 5 percent.

German automakers keeping pace

Volkswagen saw its best March since 1973 with sales up 35 percent over March a year earlier, and buyers sent sales of luxury brands BMW and Mercedes-Benz up 18 percent and 11 percent, respectively, during the month.

InAutoNews said BMW sold 52,616 vehicles in the first quarter of 2012 after succeeding Lexus as the top-selling luxury brand in the United States last year. Lexus held the luxury crown from 1999 to 2010.

It's been an up-and-down year for sales of the plug-in electric Chevrolet Volt. Now it's looking up again.

General Motors suspended production of the Volt and its sibling Opel Ampera for five weeks at the Detroit Hamtrack Assembly Plant March 19, but after selling 2,289 Volts in March, decided to resume production a week earlier than planned on April 23.

"We're doing it because we sold a lot," GM President of North America Mark Reuss told The Detroit News.

GM Chairman and Chief Executive Officer Dan Akerson has said Chevy needs to consistently sell 2,000 to 3,000 of the $41,000 Volts a month to make the high-tech plug-in hybrid a success. GM sold 603 cars in January and 1,023 in February.

The Ampera, the European version of the Volt, had 7,000 pre-orders.

The extended range hybrid can travel about 35 miles on a single charge before a gasoline-powered generator comes on producing electricity to run the car and recharge its batteries.

Rival Nissan hopes to sell 20,000 of the all-electric Leaf in the United States this year and is upgrading 2013 models with fancy interiors and improved climate control systems.

Return of the Viper

Ralph Gilles, head of Chrysler's gearhead SRT brand announced the return of the iconic Viper sports car to the American Le Mans racing circuit.

The 2013 Viper SRT (Street and Racing Technology) is still a wicked two-seater with a 640-horsepower V-10 engine, 40 more horses than previously, and a top speed of 206 mph. The mostly hand-built redesigned car weighs in at 3,297 pounds -- about 100 pounds less than the 2010 model, the last year one was produced.

Gilles said Chrysler wasn't sure it would revive Viper but enthusiasts and fans asked for it.

"I think (the Viper) represents the soul of the company," he said at the New York International Auto Show. "The car is a rock star all by itself."

Gilles said Chrysler hopes to sell about 2,000 of the $80,000 roadsters a year globally.

About 26,000 of the 30,000 Dodge Vipers built since 1991 are still on the road.

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